Economy of Jammu and Kashmir :

Jammu and Kashmir has become a Union territory with its own legislature. One of the stated reasons for bifurcating the erstwhile state into two UTs is the lack of economic and social development. Jammu and Kashmir has become a Union territory with its own legislature. One of the stated reasons for bifurcating the erstwhile state into two UTs is the lack of economic and social development. The economic growth of the state of Jammu and Kashmir has been erratic in the past few years. State GDP growth rate has fluctuated between -3.2 per cent to 17.7 per cent in a matter of just two years, according to RBI data. The volatility is common for all major sectors of the economy such as industry, banking, construction, manufacturing, and agriculture.

Jammu and Kashmir's economy is predominantly dependent on agriculture and allied activities.The Kashmir valley is also known for its sericulture and cold-water fisheries. Wood from Kashmir is used to make high-quality cricket bats, popularly known as Kashmir Willow. Kashmiri saffron is also very famous and brings the state a handsome amount of foreign exchange. Agricultural exports from Jammu and Kashmir include apples, barley, cherries, corn, millet, oranges, rice, peaches, pears, saffron, sorghum, vegetables, and wheat, while manufactured exports include handicrafts, rugs, and shawls.

Horticulture plays a vital role in the economic development of the state. With an annual turnover of over Rs. 300 crore, apart from foreign exchange of over Rs. 80 crore, this sector is the next biggest source of income in the state’s economy.The region of Kashmir is known for its horticulture industry and is the wealthiest region in the state. Horticultural produce from the state includes apples, apricots, cherries, pears, plums, almonds and walnuts.

With a 56 per cent share, the service sector constitutes most of J&K’s economy. Other two major sectors constituting the state economy are industry at 27.8 per cent and agriculture at 16 per cent. The tourism sector plays an important role in the state’s economy. The sector has huge potential for employment generation, even for unskilled manpower. Tourism also caters to the allied sectors like handicrafts, handlooms, and transport. Despite the state’s unique and rich culture and heritage assets, the tourism sector accounts for only around 6.98% of the state’s GDP. Tourism in J&K is not even among the top 10 domestic destinations in the country on the basis of the number of tourist arrivals

Per Capita Income : J&K’s per capita income remained Rs 65,615 in FY18, which is well below the national average of around Rs 98,000. Despite the low per capita income, the poverty rate in J&K is 10.35 per cent, which is almost half of the national average of around 21 per cent. Human Development Index for Jammu & Kashmir, however, is higher than the national average. The minimum wage for unskilled labour is Rs 225 per day in J&K, according to the Economic Survey for 2018-19. Expenditure on the social sector in the last five years rose by 148 per cent to Rs 24,350 crore in 2018-19.

The state’s tax revenue rose by 78 per cent to Rs 11,190 crore in the last five years whereas the non-tax revenue surged by 100 per cent to Rs 5,750 crore during the period. Despite the increase in tax collections, the gross fiscal deficit of J&K has been estimated around Rs 7,720 crore for the year 2018-19, which has shot up by 69.6 per cent in the last five years, according to RBI data.

The Doda district has deposits of high-grade sapphire. Though small, the manufacturing and services sector is growing rapidly, especially in the Jammu division. In recent years, several consumer goods companies have opened manufacturing units in the region. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has identified several industrial sectors which can attract investment in the state, and accordingly, it is working with the union and the state government to set up industrial parks and special economic zones. In the fiscal year 2005–06, exports from the state amounted to Rs. 1,150 crore.However, industrial development in the state faces several major constraints including extreme mountainous landscape and power shortage.

The Government of India has been keen to economically integrate Jammu and Kashmir with the rest of India.It is one of the largest recipients of grants from New Delhi, totaling $ 812 million per year. It also has a mere 4% incidence of poverty, one of the lowest in the country. In an attempt to improve the infrastructure in the state, the Indian government has commenced work on the ambitious Kashmir Railway project which is being constructed by Konkan Railway Corporation and IRCON at a cost of more than US$2.5 billion. The Jammu & Kashmir Bank, which is listed as a S&P CNX 500 conglomerate, is based in the state. It reported a net profit of Rs. 598 million in 200.

Before insurgency intensified in 1989, tourism formed an important part of the Kashmiri economy. The tourism economy in the Kashmir valley was worst hit. However, the holy shrines of Jammu and the Buddhist monasteries of Ladakh continue to remain popular pilgrimage and tourism destinations. Every year, thousands of Hindu pilgrims visit holy shrines of Vaishno Devi and Amarnath which has had significant impact on the state's economy.The Vaishno Devi yatra alone contributes Rs. 475 crore to the local economy annually.

Tourism in the Kashmir valley has rebounded in recent years and in 2009, the state became one of the top tourist destinations of India. Gulmarg, one of the most popular ski resort destinations in India, is also home to the world's highest green golf course. However with the decrease in violence in the state has boosted the states economy specifically tourism.